Plans to boost the basic state pension and reduce the number of people on means-tested benefits were criticised by pensioner groups yesterday after ministers admitted the rule changes would not take effect until 2012 at the earliest.

The government heralded reforms to lift pensioners out of poverty, which will also see the retirement age for state pensions eventually rise to 68. But Help the Aged said Britain's state scheme would remain one of the worst in western Europe despite proposals outlined in the Queen's speech, while other groups said the Treasury was to blame for blocking more far-reaching reforms.

A national pension saving scheme for up to 10 million low- and middle-income workers also came under fire after opposition parties said millions of people could be encouraged to save in the scheme only to lose out on means-tested benefits when they retired.

A former adviser to No 10 went as far as to describe the reforms as a "con trick". The government said the pensions bill, with a second to follow next year, would provide an "enduring pensions settlement". The bill will pave the way for increased pensions - but the state retirement age will rise to 66 between 2024 and 2026, to 67 between 2034 and 2036 and to 68 between 2044 and 2046.

The bill largely enacts proposals for reform of the state retirement system put forward earlier this year by a government-sponsored pensions commission.

In three reports the commission said that millions of Britons faced poverty in retirement unless people worked longer, saved more, or there was an increase in state pension funding - or a combination of all three.

The centrepiece of the bill will be a proposal to re-link the basic state pension with rises in wages, which Margaret Thatcher's administration ended in 1983. Ministers said they expected the policy to start in 2012. More people will be allowed to qualify for a full state pension. Currently men must work for 44 years and women for 39 years, compared with 30 years for both in the new scheme.

According to the government, by 2010 70% of women reaching state pension age would have a full basic pension, compared with only 30% today. This proportion would increase to more than 90% by 2025.

The bill will also limit payouts from the top-up state second pension, formerly known as Serps, which will be capped to reduce the cost to the state.

Gordon Lishman, director general of Age Concern, said: "This bill is long overdue but extremely welcome. We are delighted that the government has finally woken up to the need to improve the state pension, particularly for women who have missed out the most." But he called for an immediate return to the earnings link. "Today's pensioners cannot wait until 2012," he said.

Ros Altmann, a former Downing Street adviser and independent pensions consultant, went further in her attack on the proposals. "The reforms are a con trick - it does nothing for today's pensioners, three million of whom will have already died by 2012. This will not be a sustainable long-term solution to our pension problem," she said, adding that overall expenditure on pensions when projected into the future showed that spend for each pensioner will fall in real terms. In addition, the state second pension would become less generous, Ms Altmann said.

She added: "This is a very clever exercise in trying to persuade people that something generous is being done when the truth is it isn't. The government is rearranging the deckchairs but not making state pensions more generous."

Signalling the intention to push ahead with proposals for a national pension savings scheme, the bill will give the go-ahead to a delivery authority to work out how it should operate.

Main points

· The pensions bill provides for the retirement age to rise to 68 for men and women by 2046

· It envisages a cut in the number of years it takes to build a full state pension from 44 years for men and 39 for women to 30 years for everyone. The government says this will give 70% of women a full pension by 2010, compared with 30% today

· It proposes linking the state pension to wage rises, but not until 2012

· It calls for a delivery authority to work out how to manage a new national pension savings scheme